Daily Times
Mian Anjum Nisar asks govt to resolve power sector circular debt issue without escalating electricity cost
The Federation of Pakistan Chambers of Commerce and Industry’ s Businessmen Panel Chairman Mian Anjum Nisar has said that the growing circular debt in the power sector is a continued threat for the economy, as financial imbalance is looming large because of mismanagement, incompetence and lack of transparency have marred the power sector.
Mian Anjum Nisar said that the power sector circular debt issue should be resolved holistically without escalating electricity cost, as its size has doubled during the last two years in spite of raising the power tariff multiple times in the past.
Circular debt grows by Rs498b in FY21
Govt plans to reduce debt by increasing power tariffs and addressing inefficiencies
ISLAMABD:
The government added Rs498 billion to the flow of circular debt in the last fiscal year due to less provision of subsidies against commitments and increased cost of inefficiencies, showed documents of the energy ministry.
However, the government claimed adding a net Rs177 billion in the circular debt in fiscal year 2020-21 that ended on Wednesday on back of increase in electricity prices and reduction in the stock of the debt, according to a summary that the energy ministry submitted before the Cabinet Committee on Energy.
The power sector circular debt would stay above Rs1.1 trillion by end of fiscal year 2023 against about Rs2.55tr estimated at present. Wikimedia Commons/File
ISLAMABAD: Despite repeated tariff increases, buying out several old independent power plants (IPPs), fuel conversions, tax rationalisations and timely subsidy payments over the next two years, the power sector circular debt would stay above Rs1.1 trillion by end of fiscal year 2023 against about Rs2.55tr estimated at present.
But not doing these ‘surgical actions’ is not an option. Without these measures, the circular debt is projected to reach Rs4.7tr by end of FY2023. With some efficiency improvements in terms of five per cent increase in recovery and less than one per cent in technical losses, the circular debt is projected at Rs4.4tr by 2023, but it would be the “tariff rebasings and quarterly adjustments” that will move the needle down to about Rs3.5tr almost Rs1.1tr in two years.